How Much Does It Cost To Start A Small Business
You don’t need millions of dollars just to have a business started. If you have a small capital, you can always go for a small business. You’ll be surprised as to how it is possible to start a business at basically surprising prices and later reap real profits from it. This article will give you an idea on the cost of starting a small business nowadays.
Typical Cost Of Starting A Small Business
The typical cost of starting a small business these days can start from $1,000 to $50,000 or more.
Included In The Price Of Starting A Small Business
The price usually includes the following:
- Business license ($100 to $1,000)
- Sales and use tax registration ($50 or lower)
- Office/Warehouse space including rental/purchase, decoration/remodel, and furniture
- Signage, business cards, stationery, and the like
- Business equipment (up to $50,000 or more)
- Inventory (up to $20,000)
- Salary of employees for at least three months
Factors That Affect The Price Of Starting A Small Business
Type of business. The kind of business you want to start will greatly determine prices here. For instance, a small home-based business can cost you less than $1,000 to start while an Internet-based business can cost less than $5,000 to setup. Businesses that may require the purchase of equipment, rental of office space, and purchase of inventory can go as high as $50,000 or even more. Moreover, the type of business you get determines the cost of business license. A license for a liquor store license can run up to $1,000 while other business licenses may be around $100 only.
Geographical location. Your business location can also determine the cost of starting a business. This is true because in some big cities, the cost of business licensing and registration costs more as compared to rural areas. The same is true for the cost of business equipment, space rental, and the like.
Number of employees. The number of employees will also determine startup costs. Some small businesses may not require any employee at all; hence, salary for employees is deducted in the total startup capital for small businesses.
Equipment/Inventory. The kind and quality of equipment that must be purchased can also greatly affect startup costs. Some businesses may need a single unit of computer only while others may require machinery units. For home-based businesses, for instance, the cost can go down usually because the business owner has a computer already at home and need not buy a new one for the business.
Office/Warehouse. Your choice of office or warehouse can also affect prices. Besides geographical location, the office/warehouse space cost can go higher or lower depending on whether you purchase the space or you rent it. Purchasing the space will mean higher startup costs as compared to rental where you will only need to allot three months of rent for the initial payment.
Additional Costs
Marketing and promotional campaigns for your new business is an added cost usually. This price depends on what kind of approach you choose when advertising your business.
Ongoing monthly expenses are also an extra when starting up a small business. This includes salaries, payroll taxes, rent, advertising, supplies, utilities, inventory, and the like.
Tips Before You Decide To Start A Small Business
Go for a business that you are passionate about. Most successful business owners love what they are into. This usually makes them more interested in their business and allows them to thrive better to make it a success.
Have a very good and solid business plan. Even if this is a small business only, it still involves some money. You may want to go through the business only if you see real profits out of it and not simply taking a lot of risks in the first place.
Calculate how much you need for your business and see whether or not you can afford it. If you do not have the capacity to pay for startup costs, consider getting loans and grants from the government. Most states will offer small business grants that can help you get started with your business.
Study your business very well before even opening it. A well-informed owner can lead the business to better chances of success.
Before operating your business, make sure everything is set. Get necessary permits and licenses from local government units. Prepare as well other details including the inventory, people, equipment, and the like. If you will be hiring employees, you may want to train them first prior to getting the business started.